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Biaised Information and Effort

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  • Julie Rosaz

    () (Université de Lyon, Lyon, F-69003, France; CNRS, GATE Lyon St Etienne, UMR 5824, 93, chemin des Mouilles, Ecully, F-69130, France; ENS-LSH, Lyon, France)

Abstract

We study the impact of information manipulation by a principal on the agent’s effort. In a context of asymmetric information at the principal’s advantage, we test experimentally the principal’s willingness to bias (overestimate or under-estimate) the information she gives to her agent on his ability in order to motivate him to exert more effort. We find that i) principals do bias information, ii) agents trust the cheap-talk messages they receive and adjust their effort accordingly. Therefore, biased messages improve both the agent’s performance and thus the principal’s profit. This, however, does not increase efficiency. We also find that over-estimation occurs much more often than under-estimation. Making the signal costly in an additional treatment reduces this effect.

Suggested Citation

  • Julie Rosaz, 2010. "Biaised Information and Effort," Working Papers 1025, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
  • Handle: RePEc:gat:wpaper:1025
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    References listed on IDEAS

    as
    1. Santiago Sánchez-Pagés & Marc Vorsatz, 2009. "Enjoy the silence: an experiment on truth-telling," Experimental Economics, Springer;Economic Science Association, vol. 12(2), pages 220-241, June.
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    Cited by:

    1. Marco Kleine & Sebastian Kube, 2015. "Communication and Trust in Principal-Team Relationships: Experimental Evidence," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_06, Max Planck Institute for Research on Collective Goods.
    2. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    3. Rosaz, Julie & Villeval, Marie Claire, 2012. "Lies and biased evaluation: A real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 537-549.
    4. Ertac, Seda & Koçkesen, Levent & Ozdemir, Duygu, 2016. "The role of verifiability and privacy in the strategic provision of performance feedback: Theory and experimental evidence," Games and Economic Behavior, Elsevier, vol. 100(C), pages 24-45.
    5. Seda Ertac & Mert Gumren & Levent Kockesen, 2017. "Strategic Feedback in Teams: Theory and Experimental Evidence," Koç University-TUSIAD Economic Research Forum Working Papers 1714, Koc University-TUSIAD Economic Research Forum.
    6. Uwe Dulleck & Jonas Fooken & Yumei He, 2012. "Public Policy and Individual Labor Market Discrimination: An Artefactual Field Experiment in China," QuBE Working Papers 002, QUT Business School.

    More about this item

    Keywords

    information; feedback; bias; motivation; experiment;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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